The Ferry Saga Shows How Not To Manage A Transportation Project
Posted July 19, 2019
The government’s management of the Yarmouth Ferry has been a fiasco. We should worry about what this says about other projects.
In August last year, Bay Ferries, operator of the ferry, reported that it was meeting with U.S. Customs and Border Protection (CBP) representatives to discuss requirements and costs associated with potentially starting up ferry service to Bar Harbor, Maine, instead of Portland, Maine, which has been the service used for the most recent three years.
CPB says they made it “…clear that facility projects of this nature and scope generally take 12 to 18 months to complete from design to production.”
Further indications of possible delay were evident in December. Nevertheless, Bay Ferries CEO Mark MacDonald, supported by the province, announced in January that they had allowed an option to continue operating from Portland in 2019 to lapse.
At that time, the expected launch date was June 21st. There have been repeated postponements and it now appears unlikely that there will be any sailings this year.
Meanwhile, three levels of government have committed $9 million to upgrade the unused terminal in Yarmouth. The upgrades to Bar Harbor will cost Nova Scotia taxpayers a further $8.5 million.
Nova Scotia is paying Bay Ferries in full for fixed and variable costs including their management fee. The all-American crew of the CAT are being paid in full and some are living in Yarmouth, also at Nova Scotia’s expense.
Bay Ferries reports considerable success in having cancelled customers switch to the service from Saint John to Digby. It adds less than three hours to the driving time from Boston and the boat ride is shorter. Others may have decided to just drive, or to fly and rent a car.
Visitors by ferry have never accounted for as much as 1% of Nova Scotia’s visitors so the absence of ferry service is unlikely to show up in the overall numbers. That said, it will be very difficult for tourism operators in Yarmouth, some of whom have made investments in the expectation that the service would not be interrupted.
With this as context, consider the proposal for a commercial airport at Inverness, at a cost of $18 million. The Cabot Links resort there has been an international success story and an enormous boost to tourism in Cape Breton. It has both benefited from and contributed to Cape Breton’s other charms.
Government support has been in the form of low interest loans from Nova Scotia (fully repaid) and interest free loans from ACOA, being repaid on schedule.
Most locals are delighted, although some critics complain about government supporting a facility for affluent golfers. That is ridiculous—affluent visitors are the ones who spend the most on local goods and services, pay the most HST, and create the most jobs.
Cabot and its neighbours have launched a campaign in support of the airport, claiming without supporting evidence that it will create 600 jobs.
This is hard to understand. The Cabot resort is already doing very well with little unused capacity. Although no announcement has been made some of the extra jobs could arise from a third full length golf course.
But where would the workers come from? One of the big challenges Cabot already faces is having enough people to fill existing positions. They nevertheless feel that they can attract the people.
A reasonable case can be made that an airport could attract a few commercial flights, as does the airport serving the four-season Mont Tremblant resort. Initial hopes would be for a connector flight from Halifax.
That, together with some private jets, will make for a modest schedule during the five months a year that it operates. The building will have to be heated and cared for during the other seven. An annual operating subsidy will be required.
The Federal Government appears to be keen and the province is willing to tag along in exchange for other favours. Cabot would have to fully commit to a third golf course and related facilities, and be a substantial investor, as would the Municipality of Inverness. Advance agreement is required on who would pay the operating subsidy.
Which brings us back to the ferry fiasco where $30 million is being spent this year for little or no operation.
It would be comforting to think that discerning minds are critically examining the various costs and risk factors associated with the proposed airport and working out detailed agreements on responsibilities of the various parties.
But the drive for a decision now appears to be linked to the upcoming federal election. Political needs may preclude needed preparations.
The provincial Liberals committed themselves to the ferry in advance of the 2013 election without having a clue what it would cost, and confirmed the promise before they had agreed terms with Bay Ferries. The fiasco in 2019 is just the latest mess.
The case for the Inverness airport is tenuous at best. An announcement by governments that it will happen without the details resolved will lead to another sad story.
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